Moody's: U.S. must tackle deficit

Following the fiscal cliff deal, lawmakers must focus on deficit reduction when they tackle the debt ceiling issue to turn around a negative outlook on the U.S. credit rating, according Moody’s Investors Service.

“The rating agency expects that further fiscal measures are likely to be taken in coming months that would result in lower future budget deficits, which are necessary if the negative outlook on the government’s bond rating is to be returned to stable,” said Steven Hess, a Moody’s senior vice president.

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”Although Moody’s believes that the debt limit will eventually be raised and that the risk of default on Treasury bonds is extremely low, this confluence of events adds uncertainty to the outcome of negotiations,” he said.

One of the myths Obama and the Democrats created in 2011 was that the Republicans fighting about the debt ceiling caused our nation's credit rating to be dropped from AAA. The media went along with this untrue story - just as they cover up all of Obama's lies and distortions. The fact is, as S&P explained in its rating cut, that they were disappointed not to be a real $4 trillion cut in spending and/or tax increases, much as Simpson Bowles recommended. They did not treat the compromise with its phony bookkeeping cuts as really dealing with America's spending problems. And they were right. Now we have the fiscal cliff deal, with $600 billion more in revenue supposedly resulting from rich tax rate hikes. But, as the CBO reported, this deal actually raises their baseline estimate of the deficits by $4 trillion over 10 years. So, if you were Moody's, would you keep our rating at its current level? With Obama reelected, it is likely our nation's debt will rise to more than $20 trillion by 2016. Interest on that debt may be as high as a trillion dollars annually. Given all the tax increases Obama and the Democrats have already made, it will be harder and harder to raise taxes more. So what the GOP can do to save our country and grow the economy as well, is to insist on $3 to $4 trillion in more spending cuts and entitlement reforms next month. POLITICO and the mainstream media will throw a fit, of course, as will Obama and the Democrats, but that is the ONLY solution to America's creditworthiness and long term fiscal picture.

To put it simply, we've probably crossed over the point of no return. Defense won't be cut; entitlements won't be cut; taxes can only be raised slowly; all changes to the above could push us into recession or depression, making things worse.

For over a century, the focus has been on short term fixes. Welcome to the long term.